-- Net income up 21% for the second quarter vs. prior-year adjusted results

-- EPS guidance increased to $2.05 - $2.10 for fiscal 2014

MEDINA, Ohio, Jan. 8, 2014 /PRNewswire/ -- RPM International Inc. (NYSE: RPM) today reported record sales, net income and diluted earnings per share for its fiscal 2014 second quarter ended November 30, 2013, driven by volume increases in both its industrial and consumer segments and improved operating margins at most of its business units. Based on these results and expectations for the second half, the company increased its full-year earnings guidance for fiscal 2014.

Second-Quarter Results

Net sales increased 5.3% to $1.07 billion from $1.02 billion a year ago. Consolidated EBIT increased 30.0%, to $116.4 million from $89.5 million in the fiscal 2013 second quarter. Fiscal 2014 second-quarter net income was up 52.5% to $63.6 million from $41.7 million in the fiscal 2013 second quarter. Earnings per diluted share increased 54.8% to $0.48 from $0.31 a year ago.

In the fiscal 2013 second quarter, RPM incurred a one-time, non-cash charge of $10.8 million, or $0.09 per diluted share, for the write-down of RPM's remaining equity investment in Kemrock Industries and Exports Ltd. in India. Excluding the Kemrock charge, fiscal 2014 second-quarter consolidated EBIT improved 16.1% from an adjusted $100.4 million a year ago. Second-quarter net income grew 21.1% from an adjusted $52.5 million in the fiscal 2013 second quarter, while earnings per diluted share improved 20.0% from an adjusted $0.40 a year ago.

"Second-quarter operating performance was strong, with a vast majority of our operating units posting solid increases in sales and EBIT," stated Frank C. Sullivan, chairman and chief executive officer. "Sales increases in both of our business segments were primarily driven by improved unit volume, with relatively minimal acquisition growth or pricing," he stated.

Second-Quarter Segment Sales and Earnings

During the fiscal 2014 second quarter, industrial segment sales grew 2.6% to $708.7 million from $691.1 million in the fiscal 2013 second quarter. Organic sales improved 2.2%, including 0.9% in foreign exchange translation losses, while acquisition growth added 0.4%. Industrial segment EBIT increased 7.4% to $83.9 million from $78.1 million in the same period a year ago.

"Most of our industrial product lines are leveraging relatively modest sales increases into more significant gains in EBIT as a result of prior-year cost reductions in the face of a moderate economic recovery. While we experienced slight declines in North American roofing, we continue to be encouraged by the improvement in most of our European industrial operating companies, as well as the continued gradual recovery in our businesses serving commercial construction markets," Sullivan stated.

RPM's fiscal 2014 second-quarter consumer segment sales increased 11.2% to $362.8 million from $326.4 million a year ago. Organic sales improved 9.5%, including foreign exchange losses of 0.6%, while acquisition growth added 1.7%. Consumer segment EBIT improved 34.0%, to $51.7 million from $38.6 million a year ago.

"Our consumer product lines continue to enjoy high levels of organic sales volume growth as a result of continued momentum in the U.S. housing market, combined with successful, high-growth consumer segment acquisitions made in the prior fiscal year and strong consumer take-away for higher-end new products," stated Sullivan.

Cash Flow and Financial Position

For the first half of fiscal 2014, cash from operations was $21.8 million compared to $127.6 million a year ago. The decrease was primarily attributable to a $61.9 million settlement payment by the company's roofing division to the U.S. General Services Administration during the fiscal 2014 first quarter, which was accrued in fiscal 2013, and increased working capital needs during the first half associated with higher sales volumes. Capital expenditures of $34.6 million compare to depreciation of $29.1 million during the first half of this fiscal year. Total debt at November 30, 2013 was $1.37 billion, compared to $1.42 billion at November 30, 2012 and $1.37 billion at May 31, 2013. RPM's net (of cash) debt-to-total capitalization ratio was 46.4%, compared to 46.2% at May 31, 2013. At November 30, 2013, liquidity stood at $970 million, including cash of $224 million and $746 million in long-term committed available credit.

On December 9, 2013, RPM completed the issuance of $205 million of 2.25% convertible senior notes due 2020. Substantially all of the net proceeds from the sale were used to repay $200 million in principal amount of unsecured senior notes due December 15, 2013, which carried an interest rate of 6.25%. Following the sale of these notes, virtually all of RPM's total debt is at fixed rates, which average approximately 5.0%.

Fiscal 2014 first-half net sales improved 8.3% to $2.24 billion from $2.06 billion during the first six months of fiscal 2013. Consolidated EBIT increased 62.0% to $280.4 million from $173.1 million during the first six months of fiscal 2013. Net income was up 120.5% to $166.7 million from $75.6 million in the fiscal 2013 first half. Diluted earnings per share increased 119.3% to $1.25 from $0.57 a year ago.

The fiscal 2013 first half included Kemrock-related adjustments of $56.1 million, along with a one-time charge of $11.0 million associated with a strategic decision to exit certain unprofitable roofing contracts outside North America. Excluding these adjustments, sales for the fiscal 2014 first half increased 8.2% from $2.07 billion and first-half EBIT was up 16.8% from an adjusted $240.2 million a year ago. First-half net income grew 21.4% from an adjusted $137.3 million in the fiscal 2013 first half. Fiscal 2014 first-half earnings per diluted share were up 20.2% from an adjusted $1.04 a year ago.

Compared to adjusted results in the fiscal 2013 first half, industrial segment first-half net sales improved 3.1%, from $1.40 billion a year ago. Industrial segment EBIT grew 4.7% from an adjusted $175.8 million in the 2013 first half.

First-half sales for the consumer segment increased 18.9% to $796.2 million from $669.7 million a year ago. Organic sales increased 9.1%, including net foreign exchange losses of 0.5%, and acquisition growth added 9.8%. Consumer segment EBIT increased 38.0% to $134.4 million from $97.4 million in the first half of fiscal 2013.

Business Outlook

"Due to the continued improvement in the U.S. residential housing market, combined with the impact of prior-year acquisitions and the continued success of new product introductions, we now anticipate our full-year consumer segment sales growth to be 8% to 10%. This is an increase over last quarter's consumer segment guidance of 6% to 8%. We continue to expect 4% to 6% sales growth in our industrial segment and 5% to 7% consolidated net sales growth for the full year," Sullivan stated. "As a result, we are increasing our full-year EPS guidance to a range of $2.05 to $2.10, or 13% to 15% year-over-year growth, versus the range of $2.00 to $2.07 announced last quarter. This new guidance includes the impact of the convertible bond issued on December 9, 2013, which we expect to be slightly dilutive to our original earnings guidance for the year," he stated.

Webcast and Conference Call Information

Management will host a conference call to further discuss these results beginning at 10:00 a.m. EST today. The call can be accessed by dialing 866-953-6859 or 617-399-3483 for international callers. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.

For those unable to listen to the live call, a replay will be available from approximately 1 p.m. EST today until 11:59 p.m. EST on January 15, 2014. The replay can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers. The access code is 21243757. The call also will be available both live and for replay, and as a written transcript, via the RPM web site at www.RPMinc.com.

About RPM

RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services serving both industrial and consumer markets. RPM's industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Universal Sealants and Euco. RPM's consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors. Additional details can be found at www.RPMinc.com and by following RPM on Twitter at www.twitter.com/RPMintl.

For more information, contact Barry M. Slifstein, vice president – investor relations and planning, at 330-273-5090 or bslifstein@RPMinc.com.

This press release contains "forward-looking statements" relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) global markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital and the effect of changes in interest rates, and the viability of banks and other financial institutions; (b) the prices, supply and capacity of raw materials, including assorted pigments, resins, solvents and other natural gas- and oil-based materials; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our construction and chemicals businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) risks related to the adequacy of our contingent liability reserves; (j) risks and uncertainties associated with the SPHC bankruptcy proceedings; and (k) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended May 31, 2013, as the same may be updated from time to time. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

CONSOLIDATED STATEMENTS OF INCOME

IN THOUSANDS, EXCEPT PER SHARE DATA

(Unaudited)

AS REPORTED

ADJUSTED (a)

Three Months Ended

Six Months Ended

November 30,

November 30,

Three Months Ended

Six Months Ended

2013

2012

2013

2012

November 30, 2012

Net Sales

$ 1,071,487

$ 1,017,426

$ 2,236,161

$ 2,064,140

$ 1,017,426

$ 2,067,018

Cost of sales

613,542

592,425

1,279,144

1,205,259

592,425

1,202,718

Gross profit

457,945

425,001

957,017

858,881

425,001

864,300

Selling, general & administrative expenses

343,048

325,761

678,507

636,701

325,761

626,113

Interest expense

20,809

19,868

41,534

38,298

19,868

38,298

Investment (income), net

(2,005)

(1,364)

(5,899)

(8,338)

(1,364)

(8,338)

Other (income) expense, net

(1,491)

9,694

(1,925)

49,116

(1,125)

(1,976)

Income before income taxes

97,584

71,042

244,800

143,104

81,861

210,203

Provision for income taxes

29,170

24,955

69,497

59,150

24,955

62,918

Net income

68,414

46,087

175,303

83,954

56,906

147,285

Less: Net income attributable to noncontrolling interests

4,852

4,419

8,643

8,373

4,419

9,979

Net income attributable to RPM International Inc. Stockholders

$ 63,562

$ 41,668

$ 166,660

$ 75,581

$ 52,487

$ 137,306

Earnings per share of common stock attributable to

RPM International Inc. Stockholders:

Basic

$ 0.48

$ 0.32

$ 1.26

$ 0.57

$ 0.40

$ 1.04

Diluted

$ 0.48

$ 0.31

$ 1.25

$ 0.57

$ 0.40

$ 1.04

Average shares of common stock outstanding - basic

129,426

128,885

129,385

128,844

128,885

128,844

Average shares of common stock outstanding - diluted

130,418

129,700

130,359

129,635

129,700

129,635

(a)

Refer to the attached page for a reconciliation of as reported figures to adjusted figures presented above.

SUPPLEMENTAL SEGMENT INFORMATION

IN THOUSANDS

(Unaudited)

AS REPORTED

ADJUSTED (a)

Three Months Ended

Six Months Ended

November 30,

November 30,

Three Months Ended

Six Months Ended

2013

2012

2013

2012

November 30, 2012

Net Sales:

Industrial Segment

$ 708,713

$ 691,076

$ 1,439,939

$ 1,394,411

$ 691,076

$ 1,397,289

Consumer Segment

362,774

326,350

796,222

669,729

326,350

669,729

Total

$ 1,071,487

$ 1,017,426

$ 2,236,161

$ 2,064,140

$ 1,017,426

$ 2,067,018

Income Before Income Taxes (b):

Industrial Segment

Income Before Income Taxes (b)

$ 81,394

$ 75,495

$ 178,975

$ 149,799

$ 75,495

$ 170,541

Interest (Expense), Net (c)

(2,528)

(2,626)

(5,062)

(5,234)

(2,626)

(5,234)

EBIT (d)

$ 83,922

$ 78,121

$ 184,037

$ 155,033

$ 78,121

$ 175,775

Consumer Segment

Income Before Income Taxes (b)

$ 51,720

$ 38,561

$ 134,437

$ 97,349

$ 38,561

$ 97,349

Interest (Expense), Net (c)

26

(19)

65

(19)

(19)

(19)

EBIT (d)

$ 51,694

$ 38,580

$ 134,372

$ 97,368

$ 38,580

$ 97,368

Corporate/Other

(Expense) Before Income Taxes (b)

$ (35,530)

$ (43,014)

$ (68,612)

$ (104,044)

$ (32,195)

$ (57,687)

Interest (Expense), Net (c)

(16,302)

(15,859)

(30,638)

(24,707)

(15,859)

(24,707)

EBIT (d)

$ (19,228)

$ (27,155)

$ (37,974)

$ (79,337)

$ (16,336)

$ (32,980)

Consolidated

Income Before Income Taxes (b)

$ 97,584

$ 71,042

$ 244,800

$ 143,104

$ 81,861

$ 210,203

Interest (Expense), Net (c)

(18,804)

(18,504)

(35,635)

(29,960)

(18,504)

(29,960)

EBIT (d)

$ 116,388

$ 89,546

$ 280,435

$ 173,064

$ 100,365

$ 240,163

(a)

Refer to the attached page for a reconciliation of as reported figures to adjusted figures presented above.

(b)

The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles in the United States (GAAP), to EBIT.

(c)

Interest (expense), net includes the combination of interest (expense) and investment income/(expense), net.

(d)

EBIT is defined as earnings (loss) before interest and taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure

because interest expense is essentially related to corporate acquisitions, as opposed to segment operations. For that reason, we believe EBIT is also useful to investors as a metric in their investment

decisions. EBIT should not be considered an alternative to, or more meaningful than, operating income as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining

operating performance, which represent items necessary to our continued operations, given our level of indebtedness and ongoing tax obligations. Nonetheless, EBIT is a key measure expected by and useful to our

fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance. We

also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction

with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results.

CONSOLIDATED STATEMENTS OF INCOME

RECONCILIATION OF "AS REPORTED" TO "ADJUSTED"

IN THOUSANDS, EXCEPT PER SHARE DATA

Three Months Ended November 30, 2012

AS REPORTED

Adjustments

ADJUSTED

(Unaudited)

Net Sales

$ 1,017,426

$ -

$ 1,017,426

Cost of sales

592,425

-

592,425

Gross profit

425,001

-

425,001

Selling, general & administrative expenses

325,761

-

325,761

Interest expense

19,868

-

19,868

Investment expense (income), net

(1,364)

-

(1,364)

Other expense (income), net

9,694

(10,819)

(1)

(1,125)

Income before income taxes

71,042

10,819

81,861

Provision for income taxes

24,955

-

24,955

Net income

46,087

10,819

56,906

Less: Net income attributable to noncontrolling interests

4,419

-

4,419

Net income attributable to RPM International Inc. Stockholders

$ 41,668

$ 10,819

$ 52,487

Earnings per share attributable to RPM International Inc. Stockholders:

Basic

$ 0.32

$ 0.08

$ 0.40

Diluted

$ 0.31

$ 0.09

$ 0.40

(1) Adjustment removes the impact of the write-down at Corporate of RPM's remaining equity investment in Kemrock of $10,819 to zero in the

second quarter of fiscal 2013.

Six Months Ended November 30, 2012

AS REPORTED

Adjustments

ADJUSTED

(Unaudited)

Net Sales

$ 2,064,140

$ 2,878

$ 2,067,018

Cost of sales

1,205,259

(2,541)

1,202,718

Gross profit

858,881

5,419

(2)

864,300

Selling, general & administrative expenses

636,701

(10,588)

(3)

626,113

Interest expense

38,298

-

38,298

Investment (income), net

(8,338)

-

(8,338)

Other expense (income), net

49,116

(51,092)

(4)

(1,976)

Income before income taxes

143,104

67,099

210,203

Provision for income taxes

59,150

3,768

62,918

Net income

83,954

63,331

147,285

Less: Net income attributable to noncontrolling interests

8,373

1,606

9,979

Net income attributable to RPM International Inc. Stockholders

$ 75,581

$ 61,725

$ 137,306

Earnings per share attributable to RPM International Inc. Stockholders:

Basic

$ 0.57

$ 0.47

$ 1.04

Diluted

$ 0.57

$ 0.47

$ 1.04

(2)

Represents an adjustment for revised cost estimates in the Roofing Division in conjunction with unprofitable contracts outside of North America of $5,419 during the first quarter of fiscal 2013 (industrial segment).

(3)

Adjustment includes $5,588 in Roofing exit costs and $5,000 of bad debt charges relating to a Kemrock receivable during the first quarter of fiscal 2013 (industrial segment).

(4)

Adjustments include the write-downs of Kemrock investments, including $35,538 at Corporate and $4,735 at RPM's Performance Coatings Group (industrial segment) during the first quarter of fiscal 2013 and an additional $10,819 write-down at Corporate in the second quarter of fiscal 2013.